Energy, Power & Infrastructure Industry Update - August 2019

Summary

Industry | Select Recent M&A Activity

M&A: Atlas Technical Consultants, a leading provider of professional testing, inspection, engineering, and consulting services, has been acquired by Boxwood Merger Corporation. Atlas Technical Consultants was previously a portfolio company of Bernhard Capital Partners. Harris Williams (HW) served as the exclusive advisor to Atlas Technical Consultants.Source

M&A: Franklin Energy Group, a leading provider of demand side management solutions to utility clients, has been acquired by Abry Partners. Franklin Energy Group was previously a portfolio company of Kohlberg & Co. HW served as the exclusive advisor to Franklin Energy Group.Source

M&A: HHS Construction, a leading provider of infrastructure services to major telecommunications and cable providers in CA, has been acquired by Congruex. Congruex is a portfolio company of Crestview Partners.Source

M&A: Fenestration Testing Laboratories, an independent laboratory servicing manufacturers and suppliers of fenestration and other building products, has been acquired by QAI Laboratories.Source

M&A: Power Survey Company a leading provider of mobile contact voltage detection services to major utilities in North America and Europe, has been acquired by Osmose Utilities Services. Osmose Utilities Services is a portfolio company of EQT Partners.Source

M&A: Vertex Group, a provider of customer information system software and integration services to the mid-market public and investor-owned utility industry, has been acquired by DFW Capital Partners. Vertex Group was previously a portfolio company of Oakhill Capital Partners.Source

M&A: JBS Project Management, a full-service engineering consulting firm providing a range of planning and design services to end markets including utility infrastructure, downstream processing and logistics planning, has been acquired by CHA Consulting. CHA Consulting is a portfolio company of First Reserve Corporation.Source

Public Markets | Key Trading Statistics1

What We’re Reading

Engineering & Construction | The Construction Labor Shortage

“In the US alone, there are 434,000 vacant construction jobs as of April 2019, according to the US Labor Bureau. It’s important to note that this isn’t just an existential threat. Contractors have been forced to pay subcontractors higher wages, often waiting for talent to become available - ultimately slowing down jobs across the country. Many attribute the 5.86% construction cost increase in 2018, cited by the Turner Building Cost Index, to this labor shortage. Startups are racing to fix the construction productivity problem at large. VCs poured $3.1 billion into Construction Tech in 2018. Most of this money went towards modular housing companies or software that promises to optimize current processes such as project management and communication. Yet neither of these buckets addresses the labor shortage head-on. Many startups claim that robots might.”

Utilities| Top 10 Utility Regulation Trends of 2019

“Ten prominent trends and actions stand out above the rest, from renewables increasingly dominating utility resource plans, to wildfires sparking utility safety and liability concerns in California, to transportation electrification investments becoming more widespread from coast to coast. Many states are exploring changes to the traditional cost-of-service regulatory model to move toward a system that better reflects new market conditions, allows utilities to take advantage of the growing service economy, and rewards performance against established goals rather than inputs. Early this year, the Minnesota Public Utilities Commission finalized Phase 1 in its performance-based regulation investigation for Xcel Energy, and New York’s Con Edison filed a petition to increase annual electric and gas delivery revenues with earnings adjustment mechanisms, a performance incentive coming out of the Reforming the Energy Vision initiative. More performance-based regulation work is taking place in Colorado and Hawaii.”

“For decades, construction has lagged other sectors in productivity performance. Now there is an opportunity for a step change: shifting many aspects of building activity away from traditional onsite projects to offsite manufacturing-style production. While modular (or prefabricated) construction is not a new concept, it is attracting a fresh wave of interest and investment on the back of changes in the technological and economic environment. As one of the largest sectors globally, a profound shift in construction can have major impact. Recent modular projects have already established a solid track record of accelerating project timelines by 20–50 percent. The approach also has the potential to yield significant cost savings, although that is still more the exception than the norm today.”

Oil & Gas | Permian Not on Its Way Out

“’A handful of industry insiders have speculated that the Permian may be on its way out, noting that well productivity in the region is declining.’ That’s what Rystad Energy highlighted in a company statement posted on its website on Friday. The energy research company emphasized in the statement, however, that the truth is ‘quite the opposite.’ ‘Some market participants argue that the average well performance in the Permian is already declining, based on speculations of depletion of core inventory, as well as a growing share of child wells and well spacing challenges,’ Rystad Energy said in the statement. ‘After careful analysis, we do not find sufficient evidence in the data to support these speculations,’ Artem Abramov, Rystad Energy’s head of shale research, added in the statement.”

Energy Efficiency | Offshore Wind Energy’s Global Gust

“As design firms, builders, suppliers and observers consider the potential of the booming global offshore wind energy marketplace, the excitement is palpable. Key players in the arena now see unprecedented levels of demand across worldwide locations to confront the looming impacts of climate change, challenge power-delivery norms and create a pipeline for economic growth, even as new building hurdles emerge. “This is a revolution in the world in the next 15 years that is like the industrial revolution of the past,” says Matt Palmer, vice president of engineer WSP U.S. and manager of its offshore wind business. Offshore wind farms date to the 1990s, even earlier, with early ventures already retired. But the clean energy resource has demonstrated an ability to scale up greater than other types of renewables, experts say, with better reliability and consistency. As such, the market and its machines have both developed dramatically."

Our Group

Harris Williams is a leading advisor to the energy, power, and infrastructure M&A market. Our Energy, Power & Infrastructure Group has experience across a broad range of sectors, including services, products, and technologies that support or enhance energy and power infrastructure.

Select Recent Experience

Public Comparables1

1. CapIQ

2. MergerMarket

3. Baker Hughes

4. U.S. Department of Commerce

5. American Institute of Architects

6. Dodge Data & Analytics

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